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LETS FOCUS ON DESIGN, NOT SIZE WITH APARTMENTS

by Vivian’s Residential In Uncategorized

29 May 2015

 

James Tutton on Victoria’s apartment standards – discussion paper 28/5/2015

Neometro director James Tutton on Victoria’s apartment standards discussion paper.
“I think what we should be trying to do is find good design within small apartments,” says James Tutton, the director of Melbourne-based property developer Neometro, when asked about the Victorian government’s discussion paper on apartment standards. “When I say small, I’m talking 64 or 54 sqm two bedroom apartments,” says Tutton, whose firm currently has five projects on the go, ranging in size from 45 apartments up to 150.
“My view would be that there’s a midway point between some of the things that are being advocated for from the design community, and then a reasonable outcome in terms of guidelines,” says Tutton. “A lot of developers are guilty of creating absolute rubbish and pay very little heed to the wellbeing of the people who have to live in those apartments, and that’s a very negative thing, but at the same time, I think there’s also a volume of voices coming out pushing for design guidelines without understanding the economics of what they’re proposing.”
Tutton doesn’t believe we should have minimum size requirements because generally, the cost of a new apartment is $10,000 per sqm. “If we have requirements that a two-bedroom apartment must be a minimum of 70 sqm, that’s a cost of $700,000. Extrapolate that to the average Australian income and it’s a massive problem,” he said. “On top of that there’s a double whammy from a social perspective because in terms of building near existing infrastructure, medium density apartments are the best way to do it.”
“Probably the greatest thing missing from the discussion sometimes is the economic side of it. It’s also an issue of affordability. Affordability is not only impacted by the size of the apartment, it’s also impacted by other attributes of the guidelines in terms of natural light and outdoor space which means that the gross floor area you get onto a piece of land is going to be smaller, therefore the ability to divide that land area means you get less apartments on it, which in turn means that needs to be added to the price of apartments.
“So you end up with an issue whereby yes, you’ve got better apartments but they are more expensive, and that in itself is a significant social problem. The other end of the spectrum is that building apartments that have poor natural light, that have poor acoustics, that are not protected from fumes, that are not near infrastructure, require people to drive their cars when there’s no proper road infrastructure have massive consequences from a physical and natural health perspective, so that’s also very negative.
“I think what we need to find is a midway point between guidelines which protect society from apartments being built which are inherently bad for the wellbeing of society, and then protect on the affordability side as well.”
Tutton believes that without government-imposed guidelines, the market is responding to bad design in terms of buyers becoming more knowledgable, and therefore shying away from lower quality design. “Ideally that’s probably not happening at the pace at which it should happen, and I guess the problem is the fact that once buildings are built, they’re there for 150 years,” he said.
Neometro is currently doing due diligence on a bunch of projects, all of them off market. “Ideally we’d acquire three more sites this year, but as is well documented, competition for sites is very substantial so finding new sites is not easy at all,” says Tutton. 
Victoria is different to WA – I just wish that when all the apartments were built back in the old days 1979 and earlier that they built storage for the apartments and most important one car bay.  I know in Melbourne it’s just a premium to get a car bay.  Perth is probably 10 years behind but parking is definitely an advantage.  New units are generally out of the reach of our first home buyers.

MAKE YOUR OWN DECISIONS AND GIVE IT A REAL GO !!


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TOUGHER TIMES FOR THE INVESTOR SO JUMP IN NOW

by Vivian’s Residential In Uncategorized

27 May 2015

 

Investor borrowers will find it more challenging to secure finance in the coming months when we’ll see tighter lending criteria, predicts Joe Sirianni, executive director of Smartline Personal Mortgage Advisers. He says lenders of all sizes are heeding the warnings of the Australian Prudential Regulation Authority about the need to slow investor credit growth.
“As a result, we are now seeing lenders starting to actively raise the bar in terms of the requirements investors have to meet in order to secure finance,” he said. “Many of them are looking at how they can rebalance their loan portfolios and keep investment loans to 10% of their loan book, focusing their efforts on the owner-occupier market. This could prove to be an issue for some investors, particularly those who were looking to aggressively grow their portfolio with cheap finance.”
Sirianni predicts that most lenders will start to restrict and reduce the number of Interest Only loans (which are primarily used by investors) in the coming months, as they become more concerned about investors managing their mortgages, and we may see postcode weightings where investment properties purchased in ‘hot’ Sydney and Melbourne markets will have a higher assessment rate applied to them.
One major bank recently announced it was using tougher tests when determining the ability of investor borrowers to repay the loan at higher interest rates (known as the assessment rate), raising this benchmark rate from 6.8% to 7.1%. This same bank has also introduced a “floor” under how low the assessment rate can be, which is also 7.1%. Despite the May cash rate cut by the RBA, this 7.1% rate still applies and would do so even if rates fell further. Sirianni said he expected to see other lenders introduce more rigorous servicing criteria in the near future.
Look out investors you need to get moving before they really tighten it all up otherwise it will be virtually impossible for you to borrow.

MAKE YOUR OWN DECISIONS AND GIVE IT A REAL GO !!


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Online valuations are rubbish

by Vivian’s Residential In Uncategorized

13 May 2015

The clever money-makers at Australia’s (or is it Austria?) largest real estate web site dominate most real estate markets throughout Australia. Website success is adjudged on how many eye-balls view the site and these guys get plenty of lookers. A recent “added” service is to offer would-be buyers an opportunity to purchase a “Valuation” of a property listed for sale on the site.

This information is from Hayden Groves (Recon Daily)


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